Full Press Release Details
Alcon s First Quarter Sales Rise 16.2 Percent; Net Income Increases 24.0 Percent
HUENENBERG, Switzerland April 23, 2008 Alcon, Inc. (NYSE:ACL) reported global sales of $1,536.4 million for the first quarter of 2008, an increase of 16.2 percent compared to the first quarter of 2007, or 9.4 percent excluding the impact of foreign exchange fluctuations. Net earnings for the first quarter of 2008 increased 24.0 percent to $429.4 million, or $1.43 per share on a diluted basis, compared to $346.2 million, or $1.14 per share for the first quarter of 2007.
Our strong results for the first quarter came from continuing market share gains for our major pharmaceutical brands, our strong performance in Japan with several new pharmaceutical products, rapid growth in sales of our advanced technology intraocular lenses, and the continuing contributions of our international operations, especially those in emerging markets, said Cary Rayment, Alcon s chairman, president and chief executive officer.
First Quarter Sales Highlights
Highlights of sales for the first quarter of 2008 are provided below. Unless otherwise noted, all comparisons are versus the first quarter of 2007.
First Quarter Earnings Details
Highlights of earnings for the first quarter of 2008 are provided below. Unless otherwise noted, all comparisons are versus first quarter of 2007. Results for the first quarter of 2007 include $32.7 million ($20.8 million after taxes) of charges related to the impairment of certain refractive assets. Results for the first quarter of 2008 include expenses associated with the integration of WaveLight and the establishment of the company s shared service center in Switzerland.
New Product and R&D Pipeline Update
Summarized below are updates on new products and significant research and development activities.
Financial guidance for the full year 2008 and factors impacting this guidance are provided below.
Alcon, Inc. is the world s leading eye care company, with sales of approximately $5.6 billion in 2007. Alcon, which has been dedicated to the ophthalmic industry for more than 60 years, researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon s majority shareholder is Nestl , S.A., the world s largest food company. All trademarks noted in this release are the property of Alcon, Inc., with the exception of Cipro and Ciprodex , which are the property of Bayer AG and licensed to Alcon, Inc. by Bayer HealthCare AG. Moxifloxacin, the active ingredient in Vigamox , is licensed to Alcon, Inc. by Bayer HealthCare AG.
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(USD in millions, except share and per share data)
| Three months ended | ||||||
| March 31, | ||||||
| 2008 | 2007 | |||||
| Sales | $ | 1,536.4 | $ | 1,322.7 | ||
| Cost of goods sold | 398.3 | 349.0 | ||||
| Gross profit | 1,138.1 | 973.7 | ||||
| Selling, general and administrative | 484.2 | 417.1 | ||||
| Research and development | 144.9 | 133.5 | ||||
| Amortization of intangibles | 8.9 | 20.0 | ||||
| Operating income | 500.1 | 403.1 | ||||
| Other income (expense): | ||||||
| Gain (loss) from foreign currency, net | 5.9 | 3.0 | ||||
| Interest income | 25.7 | 19.9 | ||||
| Interest expense | (17.4 | ) | (9.8 | ) | ||
| Other, net | (10.8 | ) | 7.9 | |||
| Earnings before income taxes | 503.5 | 424.1 | ||||
| Income taxes | 74.1 | 77.9 | ||||
| Net earnings | $ | 429.4 | $ | 346.2 | ||
| Basic earnings per common share | $ | 1.44 | $ | 1.16 | ||
| Diluted earnings per common share | $ | 1.43 | $ | 1.14 | ||
| Basic weighted average common shares | 297,722,933 | 299,708,952 | ||||
| Diluted weighted average common shares | 301,131,014 | 303,733,106 |
ALCON, INC. AND SUBSIDIARIES
| Three months ended | Foreign | %Change in | |||||||||||
| March 31, | Currency | Constant | |||||||||||
| 2008 | 2007 | %Change | %Change | Currency | |||||||||
| GEOGRAPHIC SALES | |||||||||||||
| United States: | |||||||||||||
| Pharmaceutical | $ | 318.3 | $ | 306.6 | 3.8 | % | -- | % | 3.8 | % | |||
| Surgical | 254.0 | 234.1 | 8.5 | -- | 8.5 | ||||||||
| Consumer Eye Care | 99.7 | 93.7 | 6.4 | -- | 6.4 | ||||||||
| Total United States Sales | 672.0 | 634.4 | 5.9 | -- | 5.9 | ||||||||
| International: | |||||||||||||
| Pharmaceutical | 310.1 | 247.9 | 25.1 | 12.4 | 12.7 | ||||||||
| Surgical | 443.9 | 346.6 | 28.1 | 13.8 | 14.3 | ||||||||
| Consumer Eye Care | 110.4 | 93.8 | 17.7 | 11.6 | 6.1 | ||||||||
| Total International Sales | 864.4 | 688.3 | 25.6 | 13.0 | 12.6 | ||||||||
| Total Global Sales | $ | 1,536.4 | $ | 1,322.7 | 16.2 | 6.8 | 9.4 | ||||||
| PRODUCT SALES | |||||||||||||
| Infection/inflammation | $ | 230.0 | $ | 203.1 | 13.2 | % | |||||||
| Glaucoma | 210.7 | 185.7 | 13.5 | ||||||||||
| Allergy | 131.0 | 112.6 | 16.3 | ||||||||||
| Otic | 63.2 | 53.7 | 17.7 | ||||||||||
| Other pharmaceuticals/rebates | (6.5 | ) | (0.6 | ) | N/M | ||||||||
| Total Pharmaceutical | 628.4 | 554.5 | 13.3 | 5.5 | % | 7.8 | % | ||||||
| Intraocular lenses | 260.9 | 211.0 | 23.6 | ||||||||||
| Cataract/vitreoretinal | 405.7 | 357.7 | 13.4 | ||||||||||
| Refractive | 31.3 | 12.0 | 160.8 | ||||||||||
| Total Surgical | 697.9 | 580.7 | 20.2 | 8.2 | 12.0 | ||||||||
| Contact lens disinfectants | 114.4 | 102.0 | 12.2 | ||||||||||
| Artificial tears | 65.8 | 55.8 | 17.9 | ||||||||||
| Other | 29.9 | 29.7 | 0.7 | ||||||||||
| Total Consumer Eye Care | 210.1 | 187.5 | 12.1 | 5.9 | 6.2 | ||||||||
| Total Global Sales | $ | 1,536.4 | $ | 1,322.7 | 16.2 | 6.8 | 9.4 |
N/M - Not Meaningful
Note: Percent Change in Constant Currency calculates sales growth without the impact of foreign exchange fluctuations. Management believes constant currency sales growth is an important measure of the company s operations because it provides investors with a clearer picture of the core rate of sales growth due to changes in unit volumes and local currency prices. This measure is considered a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission.
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| March 31, | Dec. 31, | ||||||
| 2008 | 2007 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 2,499.7 | $ | 2,134.3 | |||
| Short term investments | 667.3 | 669.8 | |||||
| Trade receivables, net | 1,255.3 | 1,089.2 | |||||
| Inventories | 594.4 | 548.5 | |||||
| Deferred income tax assets | 92.4 | 89.3 | |||||
| Other current assets | 272.1 | 293.7 | |||||
| Total current assets | 5,381.2 | 4,824.8 | |||||
| Long term investments | 37.6 | 41.8 | |||||
| Property, plant and equipment, net | 1,069.9 | 1,030.0 | |||||
| Intangible assets, net | 86.1 | 89.6 | |||||
| Goodwill | 636.0 | 626.0 | |||||
| Long term deferred income tax assets | 337.1 | 322.1 | |||||
| Other assets | 83.2 | 81.3 | |||||
| Total assets | $ | 7,631.1 | $ | 7,015.6 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 211.3 | $ | 208.7 | |||
| Short term borrowings | 1,795.4 | 1,751.1 | |||||
| Current maturities of long term debt | 2.1 | 1.3 | |||||
| Other current liabilities | 893.7 | 901.1 | |||||
| Total current liabilities | 2,902.5 | 2,862.2 | |||||
| Long term debt, net of current maturities | 57.0 | 52.2 | |||||
| Long term deferred income tax liabilities | 24.0 | 23.9 | |||||
| Other long term liabilities | 716.5 | 702.6 | |||||
| Contingencies | |||||||
| Shareholders equity: | |||||||
| Common shares | 43.2 | 43.1 | |||||
| Additional paid-in capital | 1,356.2 | 1,299.8 | |||||
| Accumulated other comprehensive income | 264.1 | 203.0 | |||||
| Retained earnings | 3,818.2 | 3,392.2 | |||||
| Treasury shares, at cost | (1,550.6 | ) | (1,563.4 | ) | |||
| Total shareholders' equity | 3,931.1 | 3,374.7 | |||||
| Total liabilities and shareholders' equity | $ | 7,631.1 | $ | 7,015.6 |
ALCON, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three months ended March 31, | |||||||
| 2008 | 2007 | ||||||
| Cash provided by (used in) operating activities: | |||||||
| Net earnings | $ | 429.4 | $ | 346.2 | |||
| Adjustments to reconcile net earnings to cash provided from operating activities: | |||||||
| Depreciation | 41.4 | 46.7 | |||||
| Amortization of intangibles | 8.9 | 20.0 | |||||
| Share-based payments | 35.0 | 35.8 | |||||
| Tax benefits from share-based compensation | 2.1 | 7.5 | |||||
| Deferred income taxes | (14.9 | ) | (26.1 | ) | |||
| Loss (gain) on sale of assets | 0.6 | (4.7 | ) | ||||
| Unrealized depreciation (appreciation) on trading securities | 10.6 | (3.7 | ) | ||||
| Other | 0.9 | -- | |||||
| Changes in operating assets and liabilities: | |||||||
| Trade receivables | (121.5 | ) | (81.7 | ) | |||
| Inventories | (8.4 | ) | (6.4 | ) | |||
| Other assets | 25.2 | (0.4 | ) | ||||
| Accounts payable and other current liabilities | (21.2 | ) | (17.1 | ) | |||
| Other long term liabilities | 10.0 | 26.8 | |||||
| Net cash from operating activities | 398.1 | 342.9 | |||||
| Cash provided by (used in) investing activities: | |||||||
| Purchases of property, plant and equipment | (55.3 | ) | (33.4 | ) | |||
| Purchases of intangible assets | (5.2 | ) | (0.1 | ) | |||
| Purchases of investments | (32.0 | ) | (7.5 | ) | |||
| Proceeds from sales and maturities of investments | 22.8 | 112.0 | |||||
| Other | 1.1 | 0.6 | |||||
| Net cash from investing activities | (68.6 | ) | 71.6 | ||||
| Cash provided by (used in) financing activities: | |||||||
| Net proceeds from (repayment of) short term debt | 3.6 | (30.1 | ) | ||||
| Repayment of long term debt | (0.2 | ) | (5.1 | ) | |||
| Acquisition of treasury shares | (21.4 | ) | (503.2 | ) | |||
| Proceeds from exercise of stock options | 37.6 | 87.6 | |||||
| Tax benefits from share-based payment arrangements | 11.7 | 41.8 | |||||
| Net cash from financing activities | 31.3 | (409.0 | ) | ||||
| Effect of exchange rates on cash and cash equivalents | 4.6 | 1.5 | |||||
| Net increase in cash and cash equivalents | 365.4 | 7.0 | |||||
| Cash and cash equivalents, beginning of period | 2,134.3 | 1,489.2 | |||||
| Cash and cash equivalents, end of period | $ | 2,499.7 | $ | 1,496.2 |
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements principally relate to statements regarding the expectations of our management with respect to the future performance of various aspects of our business. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by our forward-looking statements. Words such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "hope," "intend," "estimate," "project," "predict," "potential" and similar expressions are intended to identify forward-looking statements. These statements reflect the views of our management as of the date of this
press release with respect to future events and are based on assumptions and subject to risks and uncertainties and are not intended to give any assurance as to future results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following: the development of commercially viable products may take longer and cost more than expected; changes in reimbursement procedures by third-party payers may affect our sales and profits; competition may lead to worse than expected financial condition and results of operations; currency exchange rate fluctuations may negatively affect our financial condition and results of operations; pending or future litigation may negatively impact our financial condition and results of operations; litigation settlements may adversely impact our financial condition; the occurrence of excessive property and casualty, general liability
or business interruption losses, for which we are self-insured, may adversely impact our financial condition; product recalls or withdrawals may negatively impact our financial condition or results of operations; government regulation or legislation may negatively impact our financial condition or results of operations; changes in tax laws or regulations in the jurisdictions in which we and our subsidiaries are subject to taxation may adversely impact our financial performance; supply and manufacturing disruptions could negatively impact our financial condition or results of operations. You should read this press release with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, we undertake no obligation to
publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
For more information, contact:
Investor Relations and Strategic Corporate Communications